Now That’s Fishy

Did the PPT Step In?

By Bryan Bottarelli
Friday, February 22, 2008 4:05 PM EST
Fri, 22 Feb 2008 21:05:00 GMT

Dear Bottarelli Research Member,

At 2:30 Central Time, the Dow Jones Industrial Average was down 120 points and threatening to set a new low on the day. But ten minutes later, the entire Blue Chip average somehow made a stunning recovery, and before you could blink, it was trading in positive territory. For anyone who watches the market closely, this appears to be one of the most manipulated upside rallies in quite some time. Nobody, and I mean nobody, would step in and make a large market purchase 30 minutes before the close on a Friday afternoon. Just look at this intra-day chart of the Dow below. As you can see, the index was just about to break to a new low when something happened — and the entire market jumped higher.

INDU-IntraDay

CNBC is reporting that the rally is due to a bailout of Ambac Financial Group, which could be announced on Monday or Tuesday. Now I have to tell you, a rally of this magnitude accounts for much more than “rumors.” It looks to me like the good old Plunge Protection Team (PPT) has stepped in and temporarily avoided a market melt-down going into the close. And just to justify the move, the Ambac rumors sound like a perfect excuse. To my eye, I just don’t buy it. Not one bit. Therefore, I’d like to maintain all of our current positions going into next week. Given tremendous volatility like this, the intra-day swings could be tremendous, and the only way to profit off moves like this is to carry both call and put positions — and lock in quick “sniper” profits the instant you see a 15% to 20% gain. If these rumors don’t materialize, we could drop even harder than we did today, so let’s hold our ground and remain positioned to profit off whatever the market throws our way. Until next week,

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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